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Hospital Profits Near $1 Billion

Industry Still Refuses to Set Limit on a Nurses’ Patient Load

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At a time when patient safety is being endangered by RN understaffing, the state’s hospitals have posted astounding profits totaling nearly $1 billion for the past fiscal year.

According to the numbers posted last week by Massachusetts’ Department of Healthcare Finance and Policy,1 total hospital profits surpassed $823 million for fiscal year 2005, which represents a 58 percent increase over figures for 2004.

The nearly $1 billion profit margin comes at a time when health reform proposals being debated on Beacon Hill could land the industry another $300 million. According to the latest Department of Public Health Report, while the hospital industry bottom line increases, the quality and safety of patient care has shown a marked decline. The latest DPH report on health care quality issued last summer found that patient injuries, patient complaints and medication errors have increased by an alarming 60% over the last five years.

“These figures shatter the hospital industry’s claims that they cannot provide a safe standard of RN staffing, as called for in pending legislation to establish safe staffing levels in our hospitals,” said Beth Piknick, RN, President of the Massachusetts Nurses Association, one of more than 100 organizations supporting H. 2663. “This year’s profits could pay for the staffing needed to protect patients many times over. The time has come for the hospital industry to put patients ahead of profits.”

Note: Accountants refer to these dollars as a hospital’s “surplus,” rather than its “profit”- because almost all hospitals in the state are “non-profit, charitable” institutions. Go figure. Moreover, the dollars reflected in these figures released last week represent only the hospitals’ surpluses. The total additional dollar profit generated by healthcare systems, such as mammoth Partners Healthcare System, Inc., is not reflected in these whopping numbers.

For example, UMass Memorial Healthcare System separately reported a huge figure of just under $80 million dollars in hospital surplus, and an additional $14 million-plus in system surplus, for a total of $94.3 million for the year ended September 30, 2005. That profit comes on top of a $129 million expansion and renovation underway of the UMass university emergency department and trauma center. The 2005 surplus would have topped $100 million but auditors tucked an extra $13.5 ml away in a category called supplemental Medicaid payments.

UMass Hospital officials comment that the surplus delights them and far exceeds their expectations.2

1FY05 Q4 Acute Hospital Financial Report and Hospital-specific Fact Sheets
2Bob Kievra, “UMass Memorial Posts Surplus” Worcester Telegram & Gazette, December 22, 2005